Currency exchange need not be a game of risk

World events mean that currencies can fluctuate dramatically: but the risk of
tumbling rates can be managed.

1:18PM GMT 29 Oct 2013

We live in a turbulent world. The globalised economy means that borders are increasingly crumbling - particularly within the EU - with a more mobile population moving across continents for work or for social reasons.

And where people move, money has to follow. But that raises another issue: exchange rate movements. The constant stream of political news and economic data make exchange rates a particularly volatile market.

This is because, to put it simply, currencies are essentially IOU notes issued by countries' central banks. As such they possess no intrinsic value beyond the confidence that a country's economy and government can back up a currency's worth. So currency markets can be particularly sensitive to confidence crises; such as uncertainty over government leadership.

For example the euro took a nosedive in the last week of September, dropping from €1.18 to the pound to €1.20. Much of this fall can be laid at the door of Silvio Berlusconi, whose posturing nearly brought the Italian government down. Currencies don’t like political uncertainty, hence the fall.

In the event, Berlusconi failed and the euro recovered, but the point of this political and economic lesson is to show that the decisions and indecisions of governments can impact on your pocket if you are moving between currencies.

However, while there’s nothing you can do to make the world’s politicians agree with each other, you can help yourself manage the risk of currency price fluctuations. Unless you do, exchange rate movements could make the difference between being able to afford an overseas property purchase or having to walk away, for example.

But with the expert guidance of the Telegraph International Money Transfer Service, run by the long-established exchange specialist Moneycorp, you can ensure that you don’t get any nasty surprises with exchange rates.

Once you sign up to the Telegraph International Money Transfer Service then you will be allocated your own personal expert. They will be able to give you expert about a range of methods of handling currency movements.

For example, you will get daily market briefings on currency rate movements. You can also set up accounts to monitor market movements. Your personal dealer will be able to tell you about the advantages of using "market orders". A "limit order" allows you to watch currency market movements 24 hours a day and set a target at which you want to make the exchange at. You can combine a limit order with a "stop loss" order – which sets a floor on which rate you won’t exchange below.

Or you might want to consider a "forward contract". With these, you lock into today’s exchange rate, pay a deposit but then don’t make the exchange (and pay the balance) until up to two years ahead. Forward contracts are particularly popular with those making property transactions, as even a small currency movement against you could make the difference between being able to afford to complete, or having to halt, the purchase. But, if you can afford the property at today’s exchange rate, then by taking a forward contract out it means it won’t matter if the exchange rates go haywire before you hand over the money. Your personal dealer will also be able to help you set up a Regular Payment Plan: ideal if you have commitments such as a mortgage to pay or a monthly salary to repatriate. Again, you can if you wish fix rates up to 24 months ahead: very beneficial if you have fixed costs. An RPP also makes financial sense: the fees are low and you benefit from exchange rates around 3-4pc better than the banks.

To get great exchange rates and your first transfer free call the Telegraph International Money Transfer Service freephone on 0808 115 8476 or open an account below.